California Public Employees' Retirement System, Sacramento, has...

California Public Employees’ Retirement System, Sacramento, has adopted a more flexible process for hiring external money managers for public securities. The new process will enable the $156 billion fund’s investment committee to replace underperforming managers more quickly. It also will permit the fund to reach out to qualified managers that otherwise might not respond to an RFP. Under the new process, CalPERS will use its consultant’s database, supplemented by an internal database, to winnow a broad universe of managers to a ‘‘focus universe’’ of about 50 firms for each asset class. A list of target firms, which will be submitted to the investment committee for approval, will be split between those receiving immediate funding, a reserve list and rejected firms. Contact with target firms will be maintained regularly. When CalPERS decides to change its external manager lineup, staff will begin a competitive negotiation process. The initial focus will be on searches for active managers for domestic equity, international equity and international fixed income.